The International Monetary Fund (IMF) has lauded Cyprus’ robust fiscal and economic performance in 2024, highlighting a 4.3% budget surplus and a reduction in public debt to 65% of GDP.
However, in its latest Article IV Consultation report for 2025, which was published on Monday evening, the IMF also warned over emerging signs of economic overheating and urged authorities to maintain prudent fiscal discipline.
Cyprus recorded one of the euro area’s highest growth rates last year at 3.4%, driven by strong tourism activity, rapid expansion in Information and Communication Technology (ICT), and resilient consumer demand. Yet the Fund warned that the momentum, while positive, also carries inflationary risks.
Growth is expected to decelerate to 2.5% in 2025, before stabilizing around 3% over the medium term. Inflation, which had moderated to 2.1% by March, is projected to align with the European Central Bank’s 2% target later in the year. However, the Fund cautioned that factors such as public sector wage hikes and relaxed fiscal policy could rekindle price pressures.
Strong fiscal metrics, but caution urged
( Source: CNA)
